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Ethernet Service Revenues Set to Soar

Light Reading
News Analysis
Light Reading
12/27/2004

Forecasts from a number of market research companies suggest that the market for Ethernet services will grow by at least 30 percent a year in the U.S., reaching more than $1 billion -- and possibly much more -- by 2008.

However, growth will be even more rapid elsewhere, according to analyst firms. The Asia/Pacific market for Ethernet services already dwarfs that in the U.S. and could reach $15 billion by 2008, according to one forecast. The European market is also set to grow at upwards of 40 percent a year and will top $2 billion by 2008, according to other forecasts.

On U.S. forecasts, Vertical Systems Group estimates a 30 percent compound annual growth rate (CAGR) taking revenues from $385 million in 2003 to $1.4 billion in 2008. IDC has a similar forecast, citing a CAGR of 30.7 percent and a 2008 figure of $1.2 billion.



The Yankee Group is far more bullish, citing a CAGR of 57 percent and a 2008 market size of $4 billion.

Table 1: Forecasts of US Ethernet Services Market

2003 2008 CAGR
Vertical Systems $385 million $1.4 billion 30.0%
IDC $315 million $1.2 billion 30.7%
Yankee Group $400 million $4.0 billion 57.0%




That still puts the U.S. market behind Europe, which Probe Group LLC forecasts will reach $5 billion by 2008. In its estimates, Analysys Research Ltd. notes that Ethernet shows the highest CAGR for European data services, 42 percent. Similarly, Gartner Inc. forecasts that Western Europe alone will see a CAGR of 48 percent to €2 billion ($2.7 billion), while even more potential for growth exists in Central and Eastern Europe.

But both the U.S. and Europe pale in comparison to the Asia/Pacific region, which has seen the fastest uptake of Ethernet services (see Report: Ethernet Exploding in China). Frost & Sullivan predicts revenues will reach $15.24 billion by 2008, up from $3.84 billion in 2003.

— Nicole Willing, Reporter, Light Reading

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